The correct answer is B) local governors were embezzling funds.
In addition to debt from the war, Britain was losing money in the colonies because local governors were embezzling funds.
Furthermore, American colonists were very upset with the British government for the heavy taxation imposed and other decisions that wanted to oppress Americans. Colonists resented decisions such as the Stamp Act or the Tea Act, and they rebelled against those decisions. They demanded to have a voice or representation in the British Parliament but the English did not consider them.
The other options of the question were A) a European recession drove down sales of American products. C) the production of goods had slowed in the colonies as more people expanded into other territories. D) colonist had taken to smuggling in response to the Navigation Acts.